Bills Digest no. 84 2008–09

WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.

The Therapeutic Goods Administration (TGA) is the principal
regulator of therapeutic goods in Australia. Before a product can
be marketed in Australia it must be registered in the Australian
Register of Therapeutic Goods (ARTG). For therapeutic goods such as
medicines and medical devices, the TGA makes an assessment of the
quality, safety and efficacy of the product. The TGA also has a
post-marketing surveillance role and monitors adverse reactions to
therapeutic goods. It operates on principles of risk management,
balancing the maintenance of public health and safety with reducing
unnecessary regulatory burden.

The Act and the Therapeutic Goods Administration Regulation
1990 (the Regulations) are the primary means by which
therapeutic goods and medical devices are regulated in
Australia.[2]

In part, the proposed amendments reflect much of what was agreed
in the context of the ANZTPA. Before ANZTPA was disbanded in 2007,
the TGA undertook a significant consultation process and many of
the proposed changes were agreed upon by stakeholders and
Government.

Information about the proposed regulatory reform program was
announced in July/August 2008. The TGA conducted a series of
consultations for each sector; prescription medicines,
complementary medicines, over-the-counter medicines and medical
devices. The information presented at these sessions was made
publicly
available with extensive material about the regulatory reform
process. It was noted by the TGA that these consultation sessions
were intended to provide an opportunity to discuss how the proposed
reforms might be implemented and were not intended to re-open
discussion.[3]

The TGA has described implementation of the reform agenda as an
opportunity to reduce regulatory burden across all sectors at the
same time. [4]
Reducing regulatory burden was also noted by the Parliamentary
Secretary during the consultation sessions.[5] The changes to the fit and proper
person test (for the purposes of holding a manufacturing licence or
medical device conformity assessment certificate) and the
additional pharmacopoeias to be used as TGA standards were noted in
the consultation process and have been reflected in the
legislation.

As the Explanatory Memorandum is quite comprehensive, this
section of the Digest simply seeks to summarise the key issues
raised by the Bill. The Main Provisions section of the Digest
provides more detailed analysis of some of the amendments proposed
in the Bill.

The proposed changes in the Bill are:

changes to the fit and proper person test in relation to the
grant of manufacturing licences and conformity assessment
certificates

inclusion of the United States Pharmacopeia and European
Pharmacopeia as default standards for therapeutic goods

increased access to information for the public and other
regulatory agencies, including more information on the ARTG and the
minutes and deliberations of expert advisory committees, and

clarification of the limits and restrictions that apply to
advertisements.

The proposed amendments in the Bill would also enable the
Government to stockpile and supply medical devices in situations of
medical emergency without having to satisfy certain requirements
usually related to the regulatory approval by the TGA. Perhaps the
most contentious aspect of this legislation is that these
exemptions are not subject to parliamentary disallowance. This
provision has also been extended to pharmaceuticals.

The amendments to the Bill seek to balance the objectives of the
Act while reducing regulatory burden. Overall, the amendments are
not contentious but there are some amendments that warrant further
consideration by the Parliament, such as the exemptions for medical
devices and associated accountability processes.

Conditions on manufacturing licences would now be linked with
the fit and proper person test. There would be provision in the
legislation to empower the Secretary[6] to require a licence holder to provide
information for the purposes of deciding whether to suspend a
licence under the fit and proper person test. A manufacturing
licence can be revoked if the fit and proper person test is not
met.

According to the TGA, the proposed changes to the fit and proper
person test are designed to improve objectivity and administrative
processes.[7]

Further detail and references to proposed provisions are
provided in the Main Provisions section.

Currently the default standard for submissions to the TGA is the
British Pharmacopeia. This is a collection of standards for UK
medicinal standards and is considered the official source of UK
pharmaceutical standards.[8] It details the mandatory standards for active
substances, excipients and formulated preparations.[9] The addition of the European and
United States Pharmacopoeias as default standards would potentially
give the pharmaceutical industry greater flexibility. Sponsors
would have to observe all aspects of a given standard.[10]

Another amendment of potential benefit to the pharmaceutical
industry would be the change in the effective date in the
publication of all pharmacopoeias. This means that a manufacturer
would be able to adopt the relevant pharmacopoeia at the same time
that it comes into effect in that country. Currently, manufacturers
of therapeutic goods have to wait for determination and gazettal by
the Minister.[11]

It is not unusual for regulators to accept other standards as
part of regulatory process. For example, the FDA accepts the use of
alternative pharmacopoeias in limited circumstances.[12] The addition of the
United States Pharmacopeia and European Pharmacopeia reflects the
growing trend towards harmonisation of global pharmaceutical
regulation. The TGA has a range of agreements with countries such
as Canada, Europe, Singapore, Switzerland and the United
States.[13]

Further detail and references to proposed provisions are
provided in the Main Provisions section.

According to the Government, Schedule 5 is designed to give
greater transparency to information on the ARTG and the
deliberations of Committees that provide advice to the TGA.[14] However, it is clearly
stated in the Explanatory Memorandum that these measures are not
designed to provide full inspection to the ARTG.[15] It is anticipated that greater
access to the ARTG will be through the TGA website.

Improved transparency of Committee deliberations would benefit
consumers and other stakeholder groups. The challenge for the TGA
will be to ensure the timeliness of the release of information.

There are also provisions in the Schedule about the release of
information by the Secretary to specific bodies such as regulatory
agencies. References such as Director-General and head would be
removed to allow for greater information sharing between regulatory
agencies. These proposed provisions would be particularly important
during times when there is a need for rapid sharing of information
such as national emergency, pandemics and emerging disease
patterns.

Further detail and references to proposed provisions are
provided in the Main Provisions section.

Currently, direct to consumer advertising of prescription
medication is not permitted in Australia. Advertising for some
therapeutic goods is permitted but this requires
pre-approval.[16]
Schedule 6 is intended to clarify what advertisements require
pre-approval and the relevant sanctions. It should be noted that
this part of the Act does not apply to advertisements directed
towards the medical profession.[17]

The Bill proposes that false or misleading representation
(express or implied) would not be permitted under the Act.[18]

Further detail and references to proposed provisions are
provided in the Main Provisions section.

In normal circumstances, therapeutic goods such as prescription
medicines; over-the-counter medicines; and medical devices must be
listed on the ARTG before they can be marketed in
Australia.[19] The
Bill contains provisions for medical devices to be stockpiled and
supplied in emergency situations without having to satisfy certain
requirements under the Act for approval by the TGA. These are
similar to existing provisions for therapeutic goods that been in
place since 2002 and are also intended to be used in situations of
national emergency, such as bioterrorism or the emergence of a
highly contagious disease.

Further detail and references to proposed provisions are
provided in the Main Provisions section.

Item 2 of Schedule 1 of the
Bill proposes to insert new Part 4-6A into
Chapter 4 of the Act, containing provisions that
would exempt certain medical devices from requirements under
Chapter 4 of the Act (Medical Devices), so as to allow those
medical devices to be stockpiled to deal with actual or possible
emergencies.

Under proposed subsection 41GS(1), the Minister
would have the discretionary power to make a written exemption from
the following requirements:

essential principles or requirements of medical devices as set
out in the regulations (section 41CA)

requirements relating to the obligations of manufacturers of
medical devices in relation to conformity assessment procedures, as
well as medical devices classifications, as set out in the
regulations (sections 41DA and 41DB)

conformity assessment certificates (Part 4-4), and

including medical devices in the Australian Register of
Therapeutic Goods (Part 4-5).

However, proposed subsection 41GS(2) would
limit the use of that discretion, whereby the Minister could only
exercise that discretion if he or she is satisfied that it would be
in the national interest for the exemption to be made to deal
with:

a possible threat to public health that may be caused by a
possible future emergency, or

an actual threat to public health caused by an emergency that
has in fact occurred.

Such an exemption would not be a legislative instrument[20] under proposed
subsection 41GS(6).

However, under proposed section 41GV, if the
Minister does make such an exemption, the Minister would have to
take reasonable steps to give a copy of either the exemption or the
variation/revocation thereof, to each person who imports,
manufactures, supplies or exports the relevant medical devices.

In addition, there are notification and tabling requirements
under proposed section 41GW.

The exemption would be subject to particular conditions set out
in proposed section 41GT and would be able to be
varied or revoked under proposed section 41GU.

Item 35 of Schedule 1 of the Bill proposes to
insert new Division 3A into Part 4-11 of Chapter 4
of the Act. Division 3A would contain provisions dealing with
offences and civil penalties related to the proposed
exemptions.

Proposed offences include:

criminal offences for breaching a condition of an exemption
(proposed section 41MNB)

Where the breach of a condition of an exemption is likely to
cause serious risk to public health, the maximum penalty is five
years imprisonment and/or 2000 penalty units ($220 000).[21] Where it is a
corporation that is found guilty of an offence, the pecuniary
penalty can be up to five times that applying to an
individual,[22]
hence in this case, the potential penalty for a corporation would
be $1.1 million.

Where there is no likelihood of serious risk to public health,
the penalty is proposed to be four years imprisonment and/or 240
penalty units ($26 400).[23]

Note, however, that in both the above instances, it is proposed
that strict liability[24] would apply to the fact that the device is of a kind
covered by the exemption in proposed section
41GS.[25]

Where the offence is a strict liability offence, the penalty is
proposed to be 60 penalty units ($660).[26]

Note that the Bill only refers to penalty not maximum penalty .
This conforms with the amendments proposed in Chapter 7 of the Bill
and it is noted that the aim of these proposed amendments is to
conform with subsection 4B(3A) of the Crimes Act
1914.[27]

It is also noted that these penalties generally conform to
similar penalties in the Act.[28]

an exemption under subsection 18A(1) would not be a legislative
instrument,[30]
and

if the Minister makes an exemption under subsection 18A(1), the
Minister must take all reasonable steps to inform any person or
class of persons who import, manufacture, supply or export the
therapeutic goods to which section 18A applies, by giving each
person a copy of the exemption, or the variation/revocation
thereof.

These proposed amendments are similar to proposed
sections 41GS and 41GV above.

The proposed amendments to the test applied in determining
whether a person is a fit and proper person in relation to grants
of manufacturers licences and conformity assessment certificates
seek to narrow its scope and make it consistent with similar tests
in other legislation.[31]

Items 2-6 of Schedule 3 of the
Bill propose to amend section 38 of the Act.

In particular, item 2 proposes to
replace paragraphs 38(1)(g)-(i) of the Act with
new paragraphs 38(1)(g) and (h).

Subsection 38(1) generally provides that the Secretary must
grant a manufacturing licence unless the Secretary is satisfied of
several matters, which include:

the applicant is not a fit and proper person to hold a licence;
or

a person who is participating in, or is likely to participate
in, managing the applicant s affairs is not a fit and proper person
to participate in the management of the affairs of a holder of a
licence; or

a person who has, or is likely to have, effective control over
the applicant is not a fit and proper person to have effective
control over a holder of a licence.

Proposed new paragraph 38(1)(g) provides that
the Secretary must be satisfied that, within the 10 year period
immediately before the licence application, at least one of the
following persons:

the licence applicant

a manager making, or participating in making, decisions
affecting all or a substantial part of the applicant s affairs,
and

if the applicant is a body corporate, someone who is a major
interest holder, in other words, a person who is either:

in the position to cast or control the casting of, more than a
fifth of the maximum number of votes that might be cast at the body
corporate s general meeting, or

holds more than a fifth of the body corporate s issued share
capital (excluding what does not carry a right to participate
beyond a specified amount in distribution of profits or
capital),[32]

had:

been convicted of an offence either against the Act or
corresponding State law; or against a Commonwealth, State or
Territory law involving fraud or dishonesty

been ordered to pay a pecuniary penalty for contravening a
civil penalty provision either of the Act or corresponding State
law; or of a Commonwealth, State or Territory law involving fraud
or dishonesty

been a manager or major interest holder of the body corporate
at the time that the above offence, contravention, breach or
suspension/revocation occurred in relation to the body
corporate.

In addition, proposed new paragraph 38(1)(h)
would enable other circumstances to be prescribed by regulations,
which could influence the Secretary s determination.

Currently, subsection 38(1A) provides for what the Secretary
must consider in determining whether the person meets the fit and
proper person test above.

Item 3 of Schedule 3 proposes
to amend subsection 38(1A) by replacing the
existing provisions with a reference to section 19B of the
Crimes Act 1914 or corresponding State or Territory law
dealing with the finding that a person has committed an offence and
acting on that finding, without recording a conviction.

Other items in Schedule 3 of the Bill propose similar amendments
to other provisions in the Act. Examples are as follows.

Section 41 (items
9-11)

Currently, paragraphs 41(1)(a)-(cd) give the
Secretary discretion to suspend or revoke a manufacturing licence
in specific circumstances, generally involving commission of
offences, orders being made against the licencee and associated
persons, and such persons not being considered to be fit and proper
persons.

Subsection 41(1A) currently sets out what the
Secretary must consider in relation to the fit and proper person
test.

Section 41EC (items
13-14)

It is necessary that the medical device, or the manufacturing
processes used to make that device, conforms to legislative
requirements. Conformity assessment of a medical device, which is
the responsibility of the manufacturer of that device,[34] is an examination of
the evidence that is generated, and procedures that are undertaken,
by the manufacturer, in deciding whether a medical device is safe
and performs as it should.[35]

Section 41EC currently deals with how applications for
conformity assessment certificates[36] are considered. A conformity
assessment certificate is one issued under existing section
41EE.[37]

Under existing section 41EA, the regulations may prescribe the
kinds of:

manufacturers of medical devices, or

medical devices,

in relation to whom conformity assessment certificates must be
issued before applications for the kind of:

medical devices manufactured by those manufacturers, or

medical devices,

are included in the Register.

The form of and procedures relating to applications are provided
for in existing section 41EB.

Currently, paragraphs 41EC(3)(a)-(c) set out
factors involving the fit and proper person test, which the
Secretary must consider when deciding whether to issue such
certificates. Items 13-14 propose amendments to
those paragraphs, which are similar to amendments proposed in
items 2-3 of Schedule 3.

Section 41ET (items
18-19)

In addition, items 18-19 propose similar
amendments to paragraphs 41ET(1)(e)-(g) and
subsection 41ET(1A). Those provisions currently
set out in what circumstances the Secretary may revoke a conformity
assessment certificate and considerations of the fit and proper
person test.

It is noted that the fit and proper person test set out in these
proposed provisions are generally consistent with tests used in
other regulatory regimes.[38]

Importantly, items 12 and 22
of Schedule 3 propose to insert new section 41AA,
as well as subsections 41ET(4) and
41JA(3) respectively into the Act, which would
provide for spent convictions protections. These protections are
part of a Spent Convictions Scheme (the Scheme), that subject to
certain exclusions, aim to protect against discrimination based on
certain previous convictions, once a particular period of time has
passed without the person in question re-offending.[39]

Schedule 4 of the Bill contains proposals to
amend existing provisions in the Act in relation to default
standards.

Certain proposed amendments, such as items 2,
5, 8-9,
11, 13-14,
16-19, simply delete references
to animal(s) or British Pharmacopeia (Veterinary), which reflect
that the Act does not regulate therapeutic goods for veterinary
use.

Other proposed amendments relate to amending the definitions of
standard , British Pharmacopeia , European Pharmacopeia and United
States Pharmacopeia-National Formulary, to include the European
Pharmacopeia and United States Pharmacopeia-National Formulary as
alternative default standards to which therapeutic goods must
conform, in addition to the existing default standard the British
Pharmacopeia.

Item 15 proposes to replace existing
section 13 of the Act with a new section
13. This proposed amendment generally reflects the use of
additional default standards and the non-application of the Act to
therapeutic products for veterinary purposes.

Items 4-8 of Schedule 5 of the
Bill propose to amend subsections 61(3) and (4); as well as
paragraphs 61(2)(a), 61(2)(b), 61(3A)(a) and
61(4A)(a)-(ba) of the Act, to the effect that the
Secretary would be able to release information to the organisation
rather than simply to the person in the position of head or
Director-General of that organisation. The aim is to reduce
administrative difficulties in giving information to another
regulatory body when the head of that body cannot be
contacted.[40]

In addition, items 13 and 14
of Schedule 5 of the Bill propose to
insert new subsections 61(5AA),
61(5AB), 61(5C) and
61(5D) into the Act, with the effect that the
Secretary would be able to release therapeutic goods information of
a kind specified by legislative instrument, either to a person,
body or authority also specified by legislative instrument that the
Secretary would be able to make or to the public.

The Act and Regulations regulate the advertising of therapeutic
goods[41] and
Schedule 6 of the Bill proposes amendments to the Act relating to
such advertising.

The proposed amendments basically restructure Divisions 1-3 of
Part 5-1 of the Act dealing with advertisements.

However, it is noted that item 9 of
Schedule 6 of the Bill proposes to insert
new subsection 42DKB(2) into the Act, whereby a notice
under proposed new subsection 42DKB(1) prohibiting
the publication or broadcasting of an advertisement containing a
false or misleading representation, would not be a legislative
instrument.[42]

While it may be argued that overall, the proposed amendments are
not contentious, the following proposed amendments warrant further
consideration by the Parliament.

First, the Bill proposes that certain notices would not be
legislative instruments.[43] If such notices are not legislative instruments, they
would not be tabled in Parliament and not be subject to
parliamentary scrutiny and disallowance.

According to the Government, the reason why it proposes that
notices of exemption allowing medical devices and therapeutic goods
to be stockpiled in case of future possible or current actual
national emergencies is because the contents of the stockpile
should be classified as confidential to protect it from potential
bioterrorists using it to plan attacks for diseases or other agents
for which Australia is not prepared.[44] The question remains, however, that
notwithstanding national security, what systems will be implemented
to ensure accountability in relation to such major decisions?

It is also noted that the following would not be legislative
instruments:

thereby also removing such notices from
Parliamentary scrutiny and disallowance, raising questions of
necessity, as well as transparency and accountability. A possible
compromise would be that there should be legislative instruments,
which would not be subject to disallowance in accordance with the
provisions of section 44 of the Legislative Instruments Act
2003.

Second, the proposed amendments would give the Minister
discretionary power in relation to certain matters, which
include:

making, varying and revoking exemptions

specifying persons and bodies to whom therapeutic goods
information may be released

specifying the kind of therapeutic goods information that may
be released, and

determining the applicability of standards in certain
circumstances involving therapeutic goods consisting of a mixture
of ingredients or a combination of component parts
(proposed subsection 13(5)item 15
Schedule 4).

However, the proposed amendments do not specify the parameters
underpinning the exercise of that discretion. For example, under
proposed subsection 41GS(2) in item
2 of Schedule 1 of the Bill, references
are made to potential threat to public health and possible future
emergency without including an explanation of how, and on what
basis, such matters would be determined.

The wording is similar to existing subsection 18A(2) of the
Act.

It is also noted that the Regulations do provide for the
establishment of various Committees whose roles include providing
specialist advice to the Minister about various issues, such as
standards. These Committees include:

Presumably, in practice, the Minister would consult these
Committees when making decisions proposed under the Bill.

Third, the Bill, itself, does not refer to review mechanisms of
decisions made by the Secretary or Minister. While it is noted that
both the Act[47]and
the Regulations[48]
do provide for review of decisions, such review is limited to the
types of decisions listed in the legislation. It does not appear
that existing appeal rights would apply to many of the proposed
amendments.

Finally, several important matters would be left to be specified
in regulations yet to be made. This makes it difficult to assess
the likely impact and effect of the proposed amendments, thereby
affecting proper consultation with stakeholders. This is
particularly relevant given that the Government has stated that the
financial burden of these proposed amendments would be
cost-recovered from industry.[49]

The aims of the amendments proposed in the Bill are not
disputed. However, notwithstanding national security requirements
for Schedules 1 and 2, the means by which such purposes are to be
achieved do raise several concerns.

As there has been little published stakeholder comment about the
proposed amendments it is not possible to comment on stakeholder
reactions or acceptance of the proposed amendments. The absence of
such commentary should not be read as a signal about stakeholder
confidence in the operational effects of the proposed changes.
Rather, the issues identified in this Digest point to the need for
more detailed examination of the practicalities of some of the
amendments.

Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277
2503.

[41]. However, the Act and Regulations do not apply to
certain advertisements, such as advertisements directed to health
professionals (practicing in both traditional and natural
medicine), people engaged in wholesale of therapeutic goods,
hospital purchasing officers, as well as members of the Australian
branch of an organization prescribed under Schedule 1 of the
Therapeutic Goods Regulations 1990: Therapeutic Goods
Act 1989 section 42AA. See also Therapeutic Goods
Administration, Advertising Therapeutic Goods in Australia ,
http://www.tga.gov.au/advert/index.htm,
accessed 22 January 2009.

[42]. As to what are legislative instruments, see
Legislative Instruments Act 2003 sections 5-9.

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